- The number one benefit of a VA loan is the ability to take advantage of lower interest rates with ease when they become available. Seriously how easy can it be? You have a pulse; sure we can do a refinance for you. Okay, I’m being facetious, but no appraisal, no income or asset verification. You don’t have to provide us with tax returns, W-2’s, pay stubs, bank statements…none of that! Are you current with your VA loan? Check. Do you have more than one or two 30 day late payments on your mortgage? “I’ve been late before”? Fine, was it 30 days past due or did you just go 15 days over and get assessed a late fee? Check
- Okay, so how much do I have to bring to closing to do this refinance? Nothing, nada, zero, zilch! As a matter of fact, this Streamline Refinance is going to put money in your pocket. Free money? NO! It’s kind of like doing small but useful cash out refinance. You will skip 2 payments and get an escrow balance refund. Why? Because interest is paid in arrears on mortgage loans my friend. When you make a payment to your mortgage company on July 1st, that is for all of the interest due from June. When we go to pay off your loan the bank is going to ask us for more than just the principal balance, they are going to want their interest up and thru the day we fund your new loan. You also have prepaid interest on the new loan for the days of interest left in the month in which you close. Thus, the 2 skipped payments. What is this escrow refund? Well, my friend, you have been paying into this account each and every month. This is for your taxes and insurance, and every VA loan has to have an escrow account to pay these bills when they come due. We have to recreate this escrow account for the new loan. We will verify with your insurance company and the title company will send us a tax cert to make sure we are escrowing for the proper amounts. If your current lender has everything right and taxes haven’t changed you should receive an escrow refund of almost the exact same amount.
- There must be a ton of paperwork involved? Not at all! We will send you a short 2-3 page loan application to get started. You will provide 3 or 4 other items to register and lock your loan and you will be closing within 3 to 4 weeks. What items do you say? Pretty easy stuff, like a copy of mortgage statement, proof of Homeowners Insurance, a copy of all borrowers’ drivers’ licenses and ss cards if not shown on the dl. The hardest thing to find may be the Mortgage NOTE, but I will send you a sample copy of what one looks like. You will find this document in the papers from your last closing. Easy, Peasy, Lemon squeezy!
- Did you know that VA loans are assumable? No, is that a good thing? Seriously, that is a great thing! What does it mean? Well, when you go to sell your home or acquire someone else’s home you/they can assume the mortgage. This means you/they agree to make all future payments on the mortgage as if you/they had taken it out initially. So if interest rates go up, this is a huge advantage to sweeten the deal, because they can assume your loan rather than paying current market prices/interest rates. This can save the buyer hundreds maybe thousands of dollars. The buyer should be willing to split that benefit with the seller. So if interest rates rise, the value of your home just went up!
- Finally, the fifth sweetest benefit of a VA loan is that you can borrower up to 100% of the home’s value without having to pay monthly mortgage insurance. With Conventional and FHA loans, you have to pay monthly mortgage insurance unless you have at least 20% down. Thru the VA, you have a one-time VA funding fee of 2.15% for the first property and 3.3% for each subsequent property unless you receive VA related disability. If you receive at least a 10% service related disability the VA funding fee is waived.
So to recap…
1) It ‘s super easy to qualify for a refinance.
2) Nothing out of pocket, cash in your pocket.
3) Less paperwork to refinance.
4) VA loans are assumable.
5) You can borrow more with lower cost.
Hopefully, this helps you understand the huge benefit a VA loan can provide. Thank you for your service.
Daemon Wathen is a seasoned loan officer of 7 plus years.
“I really enjoy working with Veterans that have given so much for this great country and for me. I strive to educate our clients about the variety of loan products we have to offer and let them choose the loan that suits them best. I strive to build a relationship with each borrower I serve, so they will feel comfortable in referring friends and family of the military. My hobbies include Golf, Sports Watching, and spending time with my 3 kids and wife.”